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In a First, Investors Approve Political Spending Resolution

June 29 — A resolution requesting that a company disclose its political spending has received
majority shareholder support, for the first time in 11 years, a report scheduled for
release June 30 said.

The report, published by the Manhattan Institute for Policy Research, said that 52
percent of shareholders at Irving, Texas-based engineering conglomerate Fluor Corp.
supported the proposal at the company's May 5 annual meeting, despite Fluor's opposition.

This is the first time that a majority of shareholders has approved a proposal on
politics-related spending over management's opposition since 2006, when the institute's
Proxy Monitor database started tracking investor proposals at Fortune 250 companies,
the report said.

The report also found that over the last decade, shareholder proponents have shifted
towards submitting more proposals related to lobbying activities, and less to direct
political spending.

Fluor's proposal, submitted by Philadelphia's Public Employees Retirement System,
requested that the company disclose its policies and procedures “for making, with
corporate funds or assets, contributions and expenditures (direct or indirect) to
(a) participate or intervene in any political campaign on behalf of (or in opposition
to) any candidate for public office, or (b) influence the general public, or any segment
thereof, with respect to an election or referendum.”

Shareholder proposals typically are advisory and do not bind management.

In a statement e-mailed June 29 to Bloomberg BNA, the company said it will continue
to discuss the proposal with its shareholders. “We refer interested parties to our
proxy statement for the board's statement in opposition to the proposal,” Fluor said.
“We currently meet all statutory disclosure requirements and are developing revisions
to our policy to comply with the proposal.”

`Significant Shift.'

The Manhattan Institute found that between 2006 to 2016, 66 percent of all politics-related
shareholder proposals focused on political spending, and 33 focused on lobbying. In
the 2015 season, 45 percent involved political spending and in 2016, 33 percent involved
political spending, its report said.

Copland said that the shift may track an increase in corporate spending on lobbying
activities. Joining lobbying groups such as trade associations is a more efficient
way of alerting lawmakers to issues of concern to companies, he said. “Ultimately,
Coke and Pepsi have about the same interests.”

Second, companies may be increasing spending on lobbying because when U.S. firms in
the same industry pre-commit to funding a trade association, they're assured their
competitors won't be “free riders”—benefiting from lobbying activities paid for others,
Copland said.

`Citizens United.'

Shareholder proposals relating to political spending significantly increased after
the Supreme Court's 2010 ruling in
Citizens United v. Federal Election Commission,
558 U.S. 310. The high court majority concluded that political spending is a form of First Amendment
protected speech and the government may not keep corporations from spending money
to support or denounce candidates in elections.

According to the report, shareholders submitted 19 proposals in 2007 related to political
spending. By 2014, that number had increased to 67, it found. By 2016, the only shareholder
proposal category to exceed the number of proposals related to political spending
was environmental-related issues, the report said.

More generally, the average approval percentage for a proposal related to lobbying
activities was 22 percent for the 2015 proxy season and the 2016 season up to June
10, the report said.

The average approval percentage for a political-spending proposal was 25 percent in
2015 and in 2016 up to June 10, it said.

To contact the reporter on this story: Stephen Joyce in New York at
sjoyce@bna.com

To contact the editor responsible for this story: Yin Wilczek at
ywilczek@bna.com

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